How Many Homes Are Investors Actually Buying in Prescott Valley, Arizona?

How Many Homes Are Investors Actually Buying?

Are big investors really buying up all the homes today?

If you’re trying to find a house to buy, this may be something you’re wondering about. Maybe you’ve read about it or seen reels on social media saying investors buying all the homes is making it even harder to find what the average buyer is looking for. But spoiler alert – there’s a lot of misinformation out there. To clear things up, here’s the scoop on what’s really happening. A lot of the big investor activity is actually in the rearview mirror already.

The Wall Street Journal (WSJ) explains:

“Investors of all sizes spent billions of dollars buying homes during the pandemic. At the 2022 peak, they bought more than one in every four single-family homes sold, though more recently their activity has slowed as interest rates rose and supply became tighter.”

The key here is investor activity has slowed significantly, and even during the peak of investor buying, 3 out of every 4 single-family homes purchased were by regular, everyday buyers – not investors. And of the investors who bought over the past few years, most weren’t the big investors you may be hearing about. The vast majority were small mom-and-pop investors – people like your neighbors who own only a couple of homes, maybe even just their main residence and a vacation home.

But let’s focus on the giant, mega-investor firms since that’s what is being talked about so frequently on social media right now. Mega investors are those who own 1,000+ properties. You may be surprised to see that, according to the Wall Street Journal, they don’t buy all that many homes (see graph below):

No Caption Received

This graph tells us two things. First, institutional investors were never buying a large percentage of available homes. During the peak in 2022, they bought about 2% of available single-family homes. Second, that percentage has gotten even smaller recently (so small the number rounds down to 0%).

In an effort to understand why that percentage is trending down, private lender RCN Capital asked investors about the challenges they’re facing. Here’s what Jeffrey Tesch, CEO of RCN Capital, found out:

“Investors are already facing many challenges in today’s housing market – rising prices, limited inventory, and higher financing costs.”

Understanding these challenges is important because they show big, mega investors aren’t taking over the housing market.

So, don’t fall for everything you hear. They aren’t snatching up all the homes and making it impossible for regular people to buy. 

Bottom Line

Big investors aren’t buying all the homes out there. If you’ve got questions about what you’re hearing about the housing market, let’s chat. I can help you understand what’s really going on.

Why Working with a Real Estate Professional Is Crucial Right Now in Oxnard, California.

Why Working with a Real Estate Professional Is Crucial Right Now

Navigating the housing market can be tricky, especially these days. That’s why having an experienced guide when buying or selling a home is so important. The market isn’t exactly straightforward right now, and working with a real estate expert can offer insights and advice that make all the difference.

While today’s market conditions might seem confusing or overwhelming, you don’t have to handle them alone. With a trusted expert leading you through every step, you can navigate the process with the clarity and confidence you deserve.

Here are just a few of the ways a real estate expert is invaluable:

Contracts – Agents help with the disclosures and contracts necessary in today’s heavily regulated environment.

Experience – In today’s market, experience is crucial. Real estate professionals know the entire sales process, including how it’s changing right now.

Negotiations – Your real estate advisor acts as a buffer in negotiations with all parties, and advocates for your best interests throughout the entire transaction.

Industry Expertise– Knowledge is power in today’s market, and your advisor will simply and effectively explain processes, market conditions, and key terms, translating what they mean for you along the way along the way­.

Pricing – A real estate professional understands current real estate values when setting the price of your home or helping you make an offer to purchase one. Pricing matters more than ever right now, so having expert advice will help ensure you’re set up for success.

A real estate agent is a crucial guide through this challenging market, but not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success.

Finding an expert real estate advisor – not just any agent – should be your top priority if you want to buy or sell a home. As Bankrate says:

“Real estate is very localized, and you want someone who’s extremely knowledgeable about the market in your specific area. You should also look for someone with a successful track record of negotiating and closing deals, preferably for homes similar to the kind you want to buy.”

What’s the Key To Choosing the Right Expert?

Like any relationship, it starts with trust. You’ll want to know you can depend on that person to always put you and your best interests first. That means hiring a true professional. As Business Insider explains:

“As long as you’ve properly vetted the agents you’re considering and ensured they have the necessary expertise, it’s ok to go with your gut when making your final decision on which real estate agent you want to work with. You’re going to be working closely with this person, so it’s important to choose an agent you’re comfortable with.”

Bottom Line

It’s critical to have an expert on your side who’s well-versed in navigating today’s housing market dynamics. If you’re planning to buy or sell a home this year, let’s connect so you have a real estate professional to give you the best advice and guide you along the way.

Why a Foreclosure Wave Isn’t on the Horizon in Simi Valley, California.

Why a Foreclosure Wave Isn’t on the Horizon

Even though data shows inflation is cooling, a lot of people are still feeling the pinch on their wallets. And those high costs on everything from gas to groceries are fueling unnecessary concerns that more people are going to have trouble making their mortgage payments. But, does that mean there’s a big wave of foreclosures coming?

Here’s a look at why the data and the experts say that’s not going to happen.

There Aren’t Many Homeowners Who Are Seriously Behind on Their Mortgages

One of the main reasons there were so many foreclosures during the last housing crash was because relaxed lending standards made it easy for people to take out mortgages, even when they couldn’t show they’d be able to pay them back. At that time, lenders weren’t being as strict when looking at applicant credit scores, income levels, employment status, and debt-to-income ratio.

But since then, lending standards have gotten a whole lot tighter. Lenders became much more diligent when assessing applicants for home loans. And that means we’re seeing more qualified buyers who have less of a risk of defaulting on their loans.

That’s why data from Freddie Mac and Fannie Mae shows the number of homeowners who are seriously behind on their mortgage payments (known in the industry as delinquencies) has been declining for quite some time. Take a look at the graph below:  No Caption Received

What this means is that, not only are borrowers more qualified, but they’re also finding ways to navigate through their challenges, exploring their repayment options, or maybe even using the record amount of equity they have to sell and avoid foreclosure entirely.

The Answer Is: There’s No Sign of a Wave Coming

Before there can be a significant rise in foreclosures, the number of people who can’t make their mortgage payments would need to rise significantly. But, since so many buyers are making their payments today and homeowners have so much equity built up, a wave of foreclosures isn’t likely.

Take it from Bill McBride of Calculated Risk – an expert on the housing market who, after closely following the data and market leading up to the crash, was able to see the foreclosure crisis coming in 2008. McBride says:

“We will NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.”

Bottom Line

If you’re worried about a potential foreclosure crisis, know there’s nothing in the data to suggest that’ll happen. Buyers are more qualified now, and that’s one reason why they’re not falling seriously behind on their mortgage payments.

Not a Crash: 3 Graphs That Show How Today’s Inventory Differs from 2008 in Prescott, Arizona

Not a Crash: 3 Graphs That Show How Today’s Inventory Differs from 2008

Even if you didn’t own a home at the time, you probably remember the housing crisis in 2008. That crash impacted the lives of countless people, and many now live with the worry that something like that could happen again. But rest easy, because things are different than they were back then. As Business Insider says:

“Though many Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.”

Here’s why experts are so confident. For the market (and home prices) to crash, there would have to be too many houses for sale, but the data doesn’t show that’s happening. Right now, there’s an undersupply, not an oversupply like the last time – and that’s true even with the inventory growth we’ve seen this year. You see, the housing supply comes from three main sources:

  • Homeowners deciding to sell their houses (existing homes)
  • New home construction (newly built homes)
  • Distressed properties (foreclosures or short sales)

And if we look at those three main sources of inventory, you’ll see it’s clear this isn’t like 2008.

Homeowners Deciding To Sell Their Houses

Although the supply of existing (previously owned) homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current months’ supply is well below the norm, and even further below what we saw during the crash. The graph below shows this more clearly.

If you look at the latest data (shown in green), compared to 2008 (shown in red), we only have about a third of that available inventory today. No Caption Received

So, what does this mean? There just aren’t enough homes available to make values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not the case right now.

New Home Construction

People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. Even though new homes make up a larger percentage of the total inventory than the norm, there’s no need for alarm. Here’s why.

The graph below uses data from the Census to show the number of new houses built over the last 52 years. The orange on the graph shows the overbuilding that happened in the lead-up to the crash. And, if you look at the red in the graph, you’ll see that builders have been underbuilding pretty consistently since then: No Caption Received

There’s just too much of a gap to make up. Builders aren’t overbuilding today, they’re catching up. A recent article from Bankrate says:

“What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale.”

Distressed Properties (Foreclosures and Short Sales)

The last place inventory can come from is distressed properties, including short sales and foreclosures. During the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford.

Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from ATTOM to show how things have changed since the housing crash: No Caption Received

This graph makes it clear that as lending standards got tighter and buyers became more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures (shown in black) and the forbearance program helped prevent a repeat of the wave of foreclosures we saw when the market crashed.

While you may see headlines that foreclosure volume is ticking up – remember, that’s only compared to recent years when very few foreclosures happened. We’re still below the normal level we’d see in a typical year.

What This Means for You

Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. As Forbes explains:

“As already-high home prices continue trending upward, you may be concerned that we’re in a bubble ready to pop. However, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.”

Mark Fleming, Chief Economist at First American, points to the laws of supply and demand as a reason why we aren’t headed for a crash:

“There’s just generally not enough supply. There are more people than housing inventory. It’s Econ 101.”

And Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“We will not have a repeat of the 2008–2012 housing market crash. There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”

Bottom Line

The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing experts and inventory data tell us there isn’t a crash on the horizon.

Foreclosure Numbers Are Nothing Like The 2008 Crash in Ventura, California.

Foreclosure Numbers Are Nothing Like the 2008 Crash

If you’ve been keeping up with the news lately, you’ve probably come across some articles saying the number of foreclosures in today’s housing market is going up. And that may leave you feeling a bit worried about what’s ahead, especially if you owned a home during the housing crash in 2008.

The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.

Here’s the latest information stacked against the historical data to put your mind at ease.

The Headlines Make the Increase Sound Dramatic – But It’s Not

The increase the media is calling attention to is a little bit misleading. That’s because it’s comparing the most recent numbers to a time when foreclosures were at historic lows. And that lopsided comparison is making it sound like a much bigger deal than it actually is.

Back in 2020 and 2021, there was a moratorium and forbearance program that helped millions of homeowners avoid foreclosure during challenging times. That’s why numbers for just a few years ago were so low.

Now that the moratorium has come to an end, foreclosures are resuming and that means numbers are rising. But it’s an expected increase, not a surprise, and not a cause for alarm. Just because foreclosure filings are up doesn’t mean the housing market is in trouble.

To prove that to you, let’s expand the comparison out a bit more. Specifically, we’ll go all the way back to the housing crash in 2008 – since that’s what people worry may happen again.

The graph below uses research from ATTOM, a property data provider, to show foreclosure activity has been consistently lower since the crash in 2008:

No Caption Received

What the data shows is that things now aren’t anything like they were surrounding the housing crash. The bars in red are when there were over 1 million foreclosure filings a year. In 2023, there were roughly 357,000. That’s a big difference.

A recent article from Bankrate explains one of the reasons things aren’t like they were back then:

“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”

Basically, foreclosure activity is nothing like it was during the crash. That’s because most homeowners today have enough equity to keep them from going into foreclosure. And that’s a really good thing for homeowners and for the market.

The reality is, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.

Bottom Line

Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won’t lead to a crash in home prices.

Homeowners Today Have Options To Avoid Foreclosure in Phoenix, Arizona

Homeowners Today Have Options To Avoid Foreclosure

Even with the latest data coming in, the experts agree there’s no chance of a large-scale foreclosure crisis like the one we saw back in 2008. While headlines may be calling attention to a slight uptick in foreclosure filings recently, the bigger picture is that we’re still well below the number we’d see in a more normal year for the housing market. As a report from BlackKnight explains:

“The prospect of any kind of near-term surge in foreclosure activity remains low, with start volumes still nearly 40% below pre-pandemic levels.”

That’s good news. It means the number of homeowners at risk is very low compared to the norm.

But, there’s a small percentage who may be coming face to face with foreclosure as a possibility. That’s because some homeowners may have an unexpected hardship in their life, which unfortunately can happen in any market.

For those homeowners, there are still options that could help them avoid having to go through the foreclosure process. If you’re facing difficulties yourself, an article from Bankrate breaks down some things to explore:

  • Look into Forbearance Programs: If you have a loan from Fannie Mae or Freddie Mac, you may be able to apply for this type of program.
  • Ask for a loan modification: Your lender may be willing to adjust your loan terms to help bring down your monthly payment to something more achievable.
  • Get a repayment plan in place: A lender may be able to set up a deferral or a payment plan if you’re not in a place where you’re able to make your payment.

 

And there’s something else you may want to consider. That’s whether you have enough equity in your home to sell it and protect your investment.

You May Be Able To Use Your Equity To Sell Your House

In today’s real estate market, many homeowners have far more equity in their homes than they realize due to the rapid home price appreciation we’ve seen over the past few years. That means, if you’ve lived in your house for a while, chances are your home’s value has gone up. Plus, the mortgage payments you’ve made during that time have chipped away at the balance of your loan. That combo may have given your equity a boost. And if your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage. Freddie Mac explains how this can help:

“If you have enough equity, you can use the proceeds from the sale of your home to pay off your remaining mortgage debt, including any missed mortgage payments or other debts secured by your home.”  

Lean on Experts To Explore Your Options

To find out how much equity you have, partner with a local real estate agent. They can give you an estimate of what your house could sell for based on recent sales of similar homes in your area. You may be able to sell your house to avoid foreclosure.

Bottom Line

If you’re a homeowner facing hardship, lean on a real estate professional to explore your options or see if you can sell your house to avoid foreclosure.

The Many Non-Financial Benefits of Homeownership In Simi Valley, CA

The Many Non-Financial Benefits of Homeownership In Simi Valley, CA

Buying and owning your own home can have a big impact on your life. While there are financial reasons to become a homeowner, it’s essential to think about the non-financial benefits that make a home more than just a place to live.

Here are some of the top non-financial reasons to buy a home.

According to Fannie Mae, 94% of survey respondents say “Having Control Over What You Do with Your Living Space” is a top reason to own.

Your home is truly your own space. If you own a home, unless there are specific homeowner association requirements, you can decorate and change it the way you like. That means you can make small changes or even do big renovations to make your home perfect for you. Your home is uniquely yours and by buying, you give yourself the freedom to tailor it to your individual style. Investopedia explains:

“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world. You can customize your house, remodel, paint, and decorate without the need to get permission from a landlord.”

When you rent, you might not be able to make your place really feel like it’s yours. And if you do make any modifications, you might have to change them back before you leave. But if you own your home, you can make it just the way you want it. That level of customization can give you a sense of pride in where you live and make you feel more connected to it.

Fannie Mae also finds 90% say “Having a Good Place for Your Family To Raise Your Children” tops their list of why it’s better to buy a home.

Another important factor to think about is what stage of life you’re in. U.S. News breaks it down:

“For those with young children, buying a home and putting down roots is a major driver. . . . You don’t want the upheaval of a massive rent increase or a non-renewed lease to impact your sense of stability.”

No matter which of life’s milestones you’re in, stability and predictability are important. That’s because the one constant in life is that things will change. And, as life changes around you, having a familiar home and not worrying about moving regularly helps you and those who matter most feel more secure and more comfortable.

Lastly, Fannie Mae says 82% list “Feeling Engaged in Your Community” as another key motivator to own.

Owning your home also helps you feel even more connected to your neighborhood. People who own homes usually live in them for an average of nine years, according to the National Association of Realtors (NAR). As that time passes, it’s natural to make friends and build strong ties in the community. As Gary Acosta, CEO and Co-Founder at the National Association of Hispanic Real Estate Professionals (NAHREP), points out:

“Homeowners also tend to be more active in their local communities . . .”

When you care deeply about the people you live near, you’ll do what you can to contribute to your local area.

Bottom Line

Owning your home can make your life better by giving you a sense of accomplishment, pride, stability, and connectedness. If you’re thinking about becoming a homeowner and want to learn more, let’s connect.

Housing Market Forecast for the Rest of 2023

 

Housing Market Forecast for the Rest of 2023

Some Highlights

  • Want to know what experts say will happen in the rest of 2023? Home prices are already appreciating again in many areas. The average of the expert forecasts shows positive price growth.
  • Where mortgage rates go for the rest of the year will depend on inflation. Based on historical trends, rates are likely to ease as inflation continues to cool.
  • Even though low inventory continues to be a challenge, experts project 5 million homes will still sell this year. That pace should pick up if rates come down.

Reasons To Sell Your House Today Simi Valley, CA

Reasons To Sell Your House Today SIMI VALLEY, CA

Some Highlights

  • Not sure if selling your house is the right move today? You should know there are a number of reasons it still makes sense to sell now.
  • Your house will stand out because inventory is low. That’s why the number of offers on recently sold homes is on the rise. And most homeowners have a lot of equity that can fuel a move.
  • If you’re thinking about selling your house, let’s connect to discuss if now may be the time to move.